Friday, January 10, 2014

BIG Employment Miss

From the BLS:

The unemployment rate declined from 7.0 percent to 6.7 percent in December, while total nonfarm payroll employment edged up (+74,000), the U.S. Bureau of Labor Statistics reported today. Employment rose in retail trade and wholesale trade but was down in information.

This is in comparison to the AP job report that printed at 238,000.

Looking at the details, we see some very large holes in the jobs data.

Retail +55,000 (Remember, the data is seasonally adjusted, so this takes the holiday hiring season into account).

Professional employment increased 19,000 in comparison to a 2013 monthly average of 53,000

Other categories growth was equally paltry.

Also consider the following hours worked data:

The average workweek for all employees on private nonfarm payrolls edged down by 0.1 hour to 34.4 hours in December. The manufacturing workweek was unchanged, at 41.0 hours, and factory overtime edged up by 0.1 hour to 3.5 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls edged down by 0.1 hour to 33.6 hours.

Finally, there is the issue of the drop in the unemployment rate, which went from 7%-6.7%. The reason is the drop in the civilian labor force from 155,284,000 to 154,937,000. Put another way, expect to hear more about "people running from the US labor market."

A final caveat from Bonddad: I've grown to give this monthly data point release less and less importance, instead focusing on the broader employment picture -- which is still miserable. However, from a practical side, this data point will move the markets because of the size of the miss and the fact it contradicts the "US economy is getting stronger" narrative we've been seeing over the last few months.